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MARKET CLOSE: NZ shares edge up, led by Air NZ and Heartland Bank

Monday 1st May 2017

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New Zealand shares rose on renewed enthusiasm for Heartland Bank and news Air New Zealand has tapped former Prime Minister John Key for its board, while Fletcher Building and Chorus fell.



The S&P/NZX 50 Index gained 3 points, or 0.05 percent, to 7,382.22. Within the index, 30 stocks gained, 13 fell and seven were unchanged. Turnover was $115 million.



"There has been renewed enthusiasm for the market as we see swap rates come back down again and the market being a little bit more supported, after the French election results were positive for markets globally and after we saw some positive policy enthusiasm from Trump, particularly around tax cuts," said Peter McIntyre, an investment adviser at Craigs Investment Partners.



New Zealand's 2-year swaps are at 2.28 percent versus 2.40 percent at the beginning of the year while 10-year swaps are at 3.36 percent versus 3.44 percent at the beginning of January.  



Air New Zealand led the market higher, adding 2.4 percent to $2.61. McIntyre said investors are upbeat about rising passenger numbers.  "It is carrying on good momentum for the 2017 financial year where some people might have anticipated a more dramatic slowdown because of increasing competition," he said.



Late in the day the company also announced Key has been tapped to join the board of Air New Zealand, his first public appointment since stepping down on Dec. 5.



Heartland Bank was also firm, adding 1.8 percent to $1.69. McIntyre noted that recent economic data in New Zealand has remained strong "and they are a direct beneficiary of that... they have continued to gather support in a market where value seems to be hard to find," he said. 



Genesis Energy added 0.7 percent to $2.15 after news it has agreed to acquire the retail LPG business of Todd Corp's Nova Energy unit for $192 million, a move that will give New Zealand's biggest electricity retailer almost a fifth of that market.  "They have moved from being a small player to being a main player and its pretty much earnings accretive," he said.



The New Zealand dollar, down 1.5 percent against the US dollar in April, is helping support exporters such as Fisher & Paykel Healthcare, up 0.8 percent to $10.15. 



In the other direction, investors took profits in Fletcher Building, which had gained from the government's announcement last week of a boost to spending on transport infrastructure over four years, in part to cover the rebuild of State Highway 1 in the South Island, while also setting a lower debt target. Fletcher Building shed 1.4 percent to $8.43. 



McIntyre said investors were also opting to take some profits on Chorus, which has gained over 5 percent in the past month but was down 1.1 percent at $4.44 today. "Some investors have probably thought it has had a really good run, let's take some money off the top" he said.



Looking ahead, investors will be watching for the outcome of the US Federal Reserve's meeting later in the week as it may drive markets. Domestically the jobs data - due Wednesday - will be in focus, he said. 





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